Boob, read the following and let me know if think HITT is as good of an investment as this.
________________________August 11, 1999
KIT KARSON CORP (NESS)
Annual Report (SEC form 10KSB)
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
LIQUIDITY AND CAPITAL RESOURCES
Prior to October 1997 several attempts were made to keep the Company active. These attempts included contacting several companies; none were ever completed due to either financing problems or lack of working capital to make the merger successful.
On October 8, 1997, the management of the Company of that time entered into an agreement with Hayseed Stephens where he would take over operations in conjunction with vending certain oil and gas leases. Included in the agreement, Mr. Stephens agreed to cause the accounting and filings to become current with the Securities and Exchange Commission and other regulatory authorities.
Change of control of the Company from Art Sykes to Hayseed Stephens was on December 22, 1997. At the time of change of control it was approved by the board of directors of Kit Karson and Mr. Stephens that Mr. Sykes would receive the assets described in paragraphs 1 and 2 under Item 2 Description of Property, as compensation for taking care of the Company during the dormant years and that Hayseed Stephens would vend in a gas asset for 14,150,000 shares of stock. Please see Item 2. Properties and "Gas Reserves" for a description of the gas asset (Greenwood Gas Field) located in Parker County, Texas.
The principle asset on both December 31, 1995 and 1996 was cash being $2,680 and $1,453 for these respective dates. The Company owned one oil and gas interest in a gas well in Beaver County, Oklahoma, which was acquired by the Company without any cost in an agreement where after the investors recaptured their investment, a 4.6125% working interest would become effective. This interest was still in effect until it was assigned to Art Sykes being a part of the closing for the change of control that occurred on December 22, 1997.
RESULTS OF OPERATIONS
The Company's 4.6125% working interest in Benjegerdes #1 produced revenues for 1995 of $1,418 less operating expenses of $574 for a net income of $844 before taxes. In 1996 the revenues were $1,696 with operating expenses of $600, leaving a net income of $1,096 before taxes. No other income was reported during these three years. In 1997 the revenues were $1,934 with operating expenses of $609, leaving a net income of $1,325 before taxes.
The Company's natural gas revenues for 1998 were $22,301 compared to $1,934 for 1997. The operating expenses, production taxes and compression expenses totaled $10,460 leaving a profit from this lease of $11,841 for 1998 and net revenues of $1,119 for 1997 from the well owned in 1997.
The expenses during the year ended December 31, 1998 were nominal except for the litigation settlement which is a non cash outlay expense as the Company issued 2,701,500 shares which had a value of $1,392,900 at the time of settlement with each case.
As previously discussed in this section the Company was revived in December 1997 and during the first year of operations by new management expenses were paid by Ness Energy International, Inc. as the Company had very limited working capital. Ness paid the general and administrative expenses of $110,053 shown for 1998.
Net loss reported for 1997 and 1998 was $1,549 and 1,496,720 respectively. The 1997 loss was insignificant on a per share basis and was 3 cents per share for 1998.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). This statement standardized the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, requiring that an entity recognize those items as assets or liabilities in the statement of financial position and measure them at fair value. The statement generally provides for matching the timing of gain or loss recognition on the hedging instrument with the recognition of (a) the changes in fair value of the hedged assets or liabilities that are attributable to the hedged risk, or (b) the earnings effect of the hedged transaction. The statement is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999, with earlier application encouraged, and shall be applied retroactively to financial statements of prior periods. Adoption of SFAS 133 is expected to have no effect on the Company's financial statements.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This document includes "forward-looking" statements within the meaning of Section 27A of the Securities Act and the Company desires to take advantage of the "safe harbor" provisions thereof. Therefore, the Company is including this statement for the express purpose of availing itself of the protections of such safe harbor provisions with respect to all of such forward-looking statements. The forward-looking statements in this document reflect the Company's current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ from those anticipated. In this document, the works "anticipates," "believes," "expects."
"intends," future," and similar expressions identify forward-looking statements. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that may arise after the date hereof. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this section.
YEAR 2000 COMPLIANCE
The year 2000 poses certain issues for business and consumer computing, particularly the functionality of software for two-digit storage of dates and special meanings for certain dates such as 9/9/99. The year 2000 is also a leap year, which may lead to incorrect calculations, functions or system failure. The widespread use of computer programs that rely on these two-digit date programs to perform computations and decision-making functions may cause information technology systems to malfunction in and around the year 2000. Such malfunctions may lead to significant business delays in the U.S. and internationally. The problem exists for many kinds of software, including software for mainframes, PCs and embedded systems. Many normal business activities will potentially be impacted because computers control information necessary to monitor and control various operations.
The Company has studied and tested its technologies systems impacted by the Year 2000 transition. The Company believes that its systems are Year 2000 compliant. However, variability of hardware and software combinations may lead to unforeseen problems. The Company does not believe that any problems that arise with internal systems will be material or will require more than minimal costs to overcome.
The Company's vendors are various and diverse and the bulk of the items purchased by the Company are widely available. There are no problems which are expected to arise due to vendors' failure to be Year 2000 compliant because auxiliary channels should be available to the Company to acquire its supplies, parts and other needs from other vendors should any particular vendor have a problem due to noncompliance.
Due to the nature of the Company's business and its information and accounting systems, costs to bring its systems into compliance have been immaterial.
ITEM 7. FINANCIAL STATEMENTS.
The following financial statement information for Kit Karson Corporation begins following the signature page of this form. The index to the following financial statements is on page F-1.
Report of Independent Certified Public Accountant Balance Sheets Statement of Operations Statement of Changes in Stockholders' Equity Statement of Cash Flows Notes to Financial Statements Supplemental Data
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Robert Early & Company, P.C. audited the following years of the Company 1995, 1996 and 1997 and Weaver and Tidwell, L.L.P. audited the year ended December 31, 1998.
There are no disagreements between the Company and its auditor, Robert Early & Company P.C. of Abilene, Texas, and there are no disagreements between the Company and its current auditor Weaver and Tidwell, L.L.P. of Fort Worth regarding accounting and/or financial disclosure.
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